Moving Violation

When civil rights activist Judith Lee Berg had an opportunity to work in Atlanta three years ago, she didn't think twice about renting out her Denver home and making a temporary move to Georgia. She didn't think twice, either, about hiring A&R Transfer, a moving company a friend had recommended.

Berg has since reconsidered.
"It was really sleazy," she says now. "I go down to Atlanta and I get a call from the movers in Tennessee, saying they had to have cash on arrival. Then the moving van arrives with a fourth of what was supposed to be shipped. The boxes were broken, and the people who brought my stuff were absolutely smashed. They were so drunk; they reeked of beer."

Among the missing items, Berg says, were irreplaceable personal papers and legal files that belonged to her former husband, slain radio talk-show personality Alan Berg. She tried to discuss the matter with A&R's owner, Yuri Kagan, at his east Denver office, only to be ordered off the premises by an unidentified employee. Her attorney filed a lawsuit against Kagan, but that, too, failed to produce any compensation. Ultimately, Berg ended up joining the procession of creditors in federal bankruptcy court, in one of six bankruptcy actions Kagan has filed in the past eight years.

"Needless to say, nothing was ever recovered," Berg says. "We just decided it was a lost cause."

Kagan says that his company has moved the belongings of thousands of people successfully and that he has the testimonials to prove it. Court documents filed by his less-satisfied customers, though, portray A&R Transfer as the Mover From Hell. The company, which claims minimal assets, generally subcontracts its jobs to independent operators using U-Haul trucks or other leased equipment. Creditors charge that their movers were rude, late, or obviously intoxicated; that valuable goods, including stereos, computers and other electronics, disappeared in transit; and that other goods arrived severely damaged.

"The movers did not arrive until 9:30 p.m. and did not complete the move until 2:45 a.m.," an unhappy Julio Gonzalez wrote, in a letter of complaint to Kagan concerning his move from California to Florida last year. "[They] were not very careful...often dropping furniture against the walls and doors."

When the goods arrived in Florida two weeks later, Gonzalez added, "nearly all items that were not packed in boxes were scratched or damaged...The two persons who moved our items kept hinting at a tip and/or charges for this or that amounting approximately to an additional $100."

Over the years, dozens of creditors have sued Kagan over lost or damaged goods. In some cases they've sought triple damages under the Consumer Protection Act, claiming that A&R failed to carry required insurance despite Yellow Pages ads boasting that the company is "fully insured." Several have obtained hefty judgments--only to see their claim wiped out or put on hold indefinitely by Kagan's frequent dalliances with bankruptcy.

"He's got the system figured out," declares attorney John Cowan. "I think he found out when he did his first bankruptcy that he could get away with murder, basically."

Cowan has been chasing Kagan on behalf of the owner of a warehouse Kagan leased four years ago. After falling behind on the rent, Kagan was evicted, and Cowan obtained a $10,000 judgment against the mover last year. But Kagan filed for Chapter 13 bankruptcy protection last month, and Cowan doesn't expect to see a dime.

"I didn't file an objection [to the bankruptcy] because I didn't want my client to spend any more money," Cowan says. "There's no hope of getting anything from this guy. We were delighted to get him out of the building."

Other creditors aren't ready to give up, noting that all but one of Kagan's previous efforts at bankruptcy have met with failure. A 1989 foray into Chapter 13, which allows wage earners to put together a plan to repay a percentage of their debts, was dismissed after Kagan failed to make payments the plan called for. A 1991 Chapter 7 (straight bankruptcy) was more successful, wiping out nearly $100,000 in unsecured debt, including eleven judgments or pending lawsuits against him. Chapter 7 protection can be sought only once every seven years, but that didn't stop Kagan from trying another Chapter 13 in 1994 (dismissed at his request), followed by a Chapter 11 reorganization (also dismissed at his request), another Chapter 13 (dismissed last February by U.S. Bankruptcy Judge Sidney Brooks, who noted "numerous procedural problems" with the application), and finally, the latest filing.

"His history of staying in [bankruptcy] isn't very long," notes attorney Patrick McBride, who's been dueling with Kagan's attorneys over a 1995 default judgment for more than $20,000, which McBride obtained for the insurer of a woman who'd had her belongings mauled by A&R in a move from Seattle to Dallas. "We've decided to wait and see if he successfully completes this one. We doubt that he will, and if it's dismissed, we'll go back and pursue the judgment."

But even though Kagan has a spotty record in officially discharging his debts, many creditors appear to have been discouraged by the frequent filings, leading to claims that he is abusing the bankruptcy process. "He's been successful at dropping creditors out--people who just let their debt go away--because it becomes such an expensive process," says McBride.

"To be quite frank, we pretty much have written this case off," adds attorney Doug Meier, who filed a claim for $14,500 on behalf of a woman whose goods were damaged or missing after an A&R move from Boston to Boulder. "Even if his case is dismissed, he has so many creditors after him, it's like, 'Get in line.' I think that's what he counts on. He kind of wears you out."

Kagan, who also ran a now-defunct auto-rental business called Rent-a-Heap, blames his bankruptcies on chronic tax problems--among his priority creditors are the Internal Revenue Service ($111,944) and the Colorado Department of Revenue ($15,918)--rather than on any scheme to cheat his customers. The numerous filings were the result of "mistakes that were made by attorneys," he says.

A Latvian immigrant, Kagan claims to have moved 12,000 people in the last five years--an astonishing figure for a company that lists few assets and an annual personal income for its owner of around $30,000. He says that he's had only a hundred or so complaints in that time and that most have been resolved satisfactorily. At the same time, he suggests that many of the unsecured creditors, who are seeking approximately $80,000 in his latest filing--and who will wind up with nothing if his proposed repayment plan is approved--have inflated their claims.

"When these people send you a claim for $2,000 and then they decide to sue you for $14,000, I can care less for folks like that," Kagan says. "I deal as fairly as I can."

He adds, "I'm not going to sit here and tell you that we did not screw up. We still do and probably still will. But I get claims--here's one for lost three boxes, lady wants nineteen hundred bucks. You know why? Because there was a VCR and camera equipment. We found the boxes. We opened them. You know what was in them? Towels."

Creditors, though, dispute Kagan's account of the claims against him. So have several bankruptcy trustees, who've filed objections to various irregularities in Kagan's bankruptcy filings, including missing or incomplete lists of creditors and protracted repayment plans. One 1994 filing listed zero amount owed to unsecured, nonpriority creditors; a few weeks later, an amended filing listed $262,237 owed to such creditors. Three months later, in another action, the amount owed to nonpriority creditors had dropped to $116,680. Kagan says he decided to list every potential creditor, but that figure "turned out to be too high for the courts, so we went through it again and came up with a more realistic number."

After fielding complaints about Kagan's history of filings, his failure to comply with orders to amend the plan and other matters, Judge Brooks dismissed that action last year. His latest application has met with an objection from attorney David Miller, representing creditor McKnight Truck and Storage, who noted Kagan's initial failure to disclose previous filings and described him as "an experienced bankruptcy debtor who has managed to delay his creditors for years and avoid repaying his taxes."

Regardless of the fate of Kagan's latest bid for Chapter 13, the matter begs a larger question that's been plaguing creditors: whether A&R Transport has the necessary insurance to engage in interstate transport of household goods, as required by federal law. "Boy, that's the million-dollar question," says Meier. "He certainly holds himself out as insured. My client even purchased additional insurance from him, for all the good it did her."

Interstate movers are supposed to be registered with the Federal Highway Administration's Office of Motor Carriers and to have on file with the agency proof of minimal "cargo insurance," which usually covers loss or damage up to sixty cents per pound. OMC records indicate that A&R has had only sporadic insurance coverage over the past three years and has been relegated to "inactive" status since the fall of 1995.

Carriers who operate without proper insurance or authority are subject to fines of up to $500 a day. Kagan, though, says he had a visit from Department of Transportation inspectors a few months ago and is fully licensed to operate. "There was a period when we did not have insurance coverage for, I don't know, maybe six or eight months, when we decided not to run tractor trailers anymore," he says.

Although reluctant to discuss his current insurance situation--"Why should I tell you?"--Kagan insists he does have cargo insurance. A local agent for Great Western Casualty confirms that A&R has such a policy in effect; but that policy is designed to cover cargo damaged from a collision, not theft or damage from the movers themselves. Such exclusions wouldn't be applicable for a policy on file with OMC, says Joanne Haller, economic program manager for the agency's San Francisco office.

"If a company is operating without authority and insurance on file, that would probably subject them to investigation and enforcement action," says Haller.

But regulation of the volatile moving industry has been somewhat confusing lately. The federal agency charged with overseeing interstate transport, the Interstate Commerce Commission, was downsized out of existence in 1995, passing many of its functions on to the understaffed Office of Motor Carriers.

State and local agencies that are supposed to investigate consumer complaints about movers haven't fared much better. When one customer complained to the Colorado Attorney General's office about A&R Transfer a few months ago, she received a letter stating that the office had been unable to locate the company, which had "either gone out of business or has moved its operations to another location, leaving no forwarding address...If it comes to our attention that the business is again operating in Colorado we may then renew our efforts to contact them." (Note to AG consumer specialist Sherril Potter: See large book published by US West titled "Metro Denver Yellow Pages," subheading "Movers," page 1361.)

Denver chief deputy district attorney Phil Parrott confirms that his office also received a complaint about A&R Transfer but says that no charges have resulted. "We have talked to various agencies, state and federal, about Mr. Kagan," Parrott says, "but we have not made a filing."

Gary Frank Petty, president of the National Moving and Storage Association, says it's up to consumers to check out references and purchase the necessary insurance before letting a mover touch their worldly belongings. "Unfortunately, in some major cities, predatory practices among unethical moving companies are prevalent," he says. "Many people will get lured into this by pricing. Very often it's represented to customers that the company is fully insured and bonded, and customers think that means their goods are insured. And it means no such thing."

Petty talks about fly-by-nighters whose chief assets consist of a full-page ad in the Yellow Pages and a phone bank: no trucks, no warehouse, no staff, no insurance. The chances of getting satisfaction from such folks are dismal. "These guys operate under the radar," he says. "Often, because the amounts involved are not that great, it's treated as a consumer nuisance item."

Tell that to Judith Berg. "I never got my stuff," she says, "and a lot of it was Alan's. It was priceless.